When you are parents and grandparents the health and well-being of your family members is of tantamount importance to you. As we all know, money is important but it does not provide happiness or holistic success as a person in and of itself. This is something that many people take to heart when they are planning their estates, because receiving too much too fast can sometimes do a person more harm than good. The last thing that a well-meaning elder would want to do would be to extinguish the drive toward personal achievement of a loved one inadvertently through the giving of a generous bequest.
Faced with this situation many people decide to utilize incentive trusts to give their loved ones the best of both worlds. With an incentive trust you appoint a trustee and name the beneficiary as you would with any trust, but you include stipulations that must be met in order for the beneficiary to receive trust distributions.
For example, you could provide for ongoing distributions as long as the beneficiary remains a student in good standing at a college or university. You could then attempt to instill a work ethic by providing a matching distribution for all monies that the beneficiary earns at his or her job after graduation.
In addition to using an incentive trust to guide an heir toward positive achievement, you can also use the trust to dissuade the beneficiary from engaging in self-destructive behavior. Say you had a loved one who had a drug problem. You could state in the trust agreement that this individual must complete a drug rehabilitation program and pass ongoing drug tests as conditions that must be met before distributions are made.
Of course there are those who resent an inheritance with “strings attached,” and psychologically it is best for people to make positive decisions of their own volition. Yet, incentive trusts are a tool that is available to you and many people have used them with great success.
- Medicaid Attorneys Explain How a Pre-Paid Funeral Contract Can Help - March 31, 2021
- What Is a QTIP Trust? - March 25, 2021
- How Would You Feel about a Robot Caregiver in the Future? - March 18, 2021